According to reports, Jack Welch, the former CEO of General Electric, didn’t come to India in the late 1980s to sell outsourcing. He had jet engines and plastics on his mind. But meetings with top Indian government advisors and CEOs quickly convinced him about India’s invaluable status as a low-cost, offshore destination for outsourced services. A series of decisions led to the creation of Gecis (today’s Genpact) and the rest, as they say, is history.
Today, GE is also unrecognisable from the company Jack Welch ran in the late 1980s. From an industrial infrastructure powerhouse, it became a financial services giant in the boom years of 2002-2008 and is now on the threshold of another big change, a revolution in complex algorithms, sensors and communication that will make machines smarter and trigger big productivity gains. GE still makes those big machines that require millions of dollars of investment such as the wind and gas turbines, the jet engines that power the A380s and medical equipment which fight and detect cancer. But in the coming years, these machines will become smarter, be able to talk to each other and provide massive amounts of data for GE analysts to pore through and detect possible problems and dangers.
The industrial internet, or big data, is GE’s next big bet and India, which benefitted immensely from a GE-led foray into outsourcing in the late 1980s, may get a big part to play in this transformation.
John G Rice, vice chairman and president and CEO of GE global growth and operations, says complex software and sensors that improve a machine’s performance will be big business for the company in the coming years.
“GE is a software giant, we already are. It is embedded in our business, people don’t notice it,” Rice says. “The opportunity this unlocks is enormous. Because in the past we were just squeezing productivity out of an engine, such as lower noise, higher fuel efficiency etc. Now, that is certainly very valuable but a relatively small piece of the whole system. Now, we are starting to get into the rest of the system. Think about the downtime on a big pipeline if one compressor goes down.”
So, what is industrial internet, or the internet of all things? And why is it so important for GE? Every year GE produces jet engines, gas turbines and other industrial equipment that find a place in many infrastructure projects. GE wind turbines power windmills and GE built locomotives ferry goods on railtracks around the world.
GE has also developed software and sensors that monitor their performance on a real time basis. Mountains of data stream are streamed from these machines every day and it helps GE analysts and managers track performance, predict problems and suggest solutions.
“For 15 years, we have been developing sensors and tech to monitor equipment performance in situ,” says Rice. “We have 250 sensors in gas turbine streaming data back, we monitor 1,800 around the world every day. We are understanding every vibration, heat, and we can see an incipient failure or problem before people on the ground can see it. That’s all software.”
For example, GE is a big producer of jet engines. Tracking its performance can help engineers understand potential problems and vulnerabilities and suggest solutions before something catastrophic happens. “I see a,b, c, d and e that means f is going to happen. You have to stop this machine, and go do something before f happens.”
“Over the years, we have created a company of almost 10,000 software engineers. If you look at the world software companies, we would be in the top 20 in terms of size,” Rice says.
So what is in it for India? Rice says India’s software engineers are already working on many of the complex algorithms used to transmit and analyse data. GE could increase its investment in R&D facilities and hire more software engineers as demand grows for its digital business.
“In terms of software engineers, India has to be one of the top five places, globally. We already do some of the work in Bangalore where we have a huge research facility,” Rice says.
GE has just invested about $200 million in a facility in Pune, which will combine manufacturing of all its business divisions under one roof. Since some businesses are not so big to have a standalone plant, this facility will provide space and skilled workforce. This model facility will soon be taken worldwide and adapted to other conditions.
The investment comes at a time when India’s governance is being severely criticised for its slow pace of execution and failure in taking decisions. Rice says he won’t single India out as most developing countries have similar problems. “You play the hand that you are dealt in a country like this. We want to move faster, but we are not going anywhere.”
For India’s software engineering community and start-ups that mine data, GE’s digital business ramp-up could be a huge opportunity both in terms of employment and business deals.